Legal Hemp In 2019 May Be A Boon For Stressed Out American Farmers

America's ability to now legally grow industrial hemp could transform the nation's economy.

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Legal hemp is about to enter the American scene in a big way. The 2018 Farm Bill, which includes language that legalizes hemp across the U.S., was signed into law this week by President Trump. The stroke of that pen unleashes a potential economic dynamo for American farmers.

Currently used in over 25,000 products globally, industrial hemp-based goods include automotive parts, furniture, textiles, food, beverages, beauty products and construction supplies. Previously lumped into the Controlled Substances Act for nearly 50 years alongside heroin, LSD and marijuana, industrial hemp’s mystifying designation as a drug of abuse has been absurd. The non-psychoactive relative of marijuana — meaning hemp cannot get you stoned like weed — is defined by the federal government as containing not more than 0.3 percent THC, the high-inducing aspect of cannabis. The use of the hemp plant by humans for millennia has always been, and will always be, for purposes other than recreational drug use.

It cannot be overstated how beneficial this plant could be for U.S. farmers in the coming years. As the agricultural landscape of America evolves — creating challenges for farmers ranging from flagging industries like tobacco and dairy to climate change and the ongoing Chinese tariff situation affecting soybean sales — a more sustainable domestic crop is essential.

Since the passing of the 2014 Farm Bill, which created pilot programs for farmers to grow legal hemp in conjunction with state-run agricultural programs, hemp has proven to be a superior choice over other traditional crops. This year, Kentucky farmer Brent Cornett explained how he’d joined a hemp growers’ group called Atalo Holdings in Winchester, Kentucky, saying for the past three years he’s dedicated an increasing amount of acreage to hemp that previously was used to grow tobacco. “There’s been plenty of challenges with a new crop, but as of today, a mediocre hemp crop is yielding a better return than an excellent tobacco crop,” he said earlier this year.

The proof of hemp’s value is in the expanding hemp acreage seen across the U.S. over the past few years. Vote Hemp, the nation's foremost hemp advocacy group, detailed in their 2017 U.S. Hemp Crop Report that 23,343 acres of hemp were cultivated last year across the nation. In 2018, that sum swelled to 77,000 acres. With the passing of the 2018 Farm Bill into law, you can be sure that number will continue to expand in 2019. U.S. imports of hemp from countries like China and Canada are decreasing, too. The Federation of American Scientists reports that in 2017, the number totaled $67.3 million in imports, down from a record high of $78.1 million in 2015.

Using the hemp-based crop science available through the growers’ group, Cornett says he increased his hemp production from 20 acres in 2016 to 85 acres in 2018. Much of that has been hemp that’s rich in cannabidiol (CBD). Touted as a popular wellness product appearing in an ever-expanding amount of goods, this year CBD was also cleared by both the U.S. Food and Drug Administration and the Drug Enforcement Administration to be used in a product called Epidiolex, an effective anti-seizure medication. According to research firm Brightfield Group, the legal market for CBD could balloon to $20 billion by 2022, reports Bloomberg.

“The hemp CBD industry is growing exponentially and presents a real opportunity for rural economic development, with tremendous enthusiasm from consumers,” says Atalo CEO William Hilliard. “Our intention is to attract the best and brightest, innovative farmers and offer them a long-term relationship rather than a spot-market.”

Atalo CEO William Hilliard in a Kentucky Hemp CBD field.

Courtesy Atalo

Hilliard says looking forward into 2019, after a recent partnership with GenCanna Global — an ag company that also specializes in CBD-rich hemp — their shared cultivation capacity will be in excess of 20,000 acres, “representing a multimillion-dollar financial commitment to our Kentucky and U.S. growers,” says Hilliard.

In Northern California, farmer Ben Roberti, whose family runs a cattle ranch and grows alfalfa, has also diversified to include hemp crops into his rotations. "So many of the dairies are shutting down on the west coast that we just don't view alfalfa as a commodity for the future," he told ABC 10. Their hemp crops are proving to grow with less water and are more frost resistant than other crops. For farmers working on tight margins, those positive qualities can be critical to a business’s bottom line.

American hemp farmers in 2019 can also look forward to new protections that conventional farmers have always enjoyed — like crop insurance, legal interstate travel and basic banking services. The 50-year federal ban on hemp has meant it was problematic to secure crop insurance for hemp, leaving farmers vulnerable to inclement weather that could devastate plants and ruin a growing season, or potentially an entire farm.

MJBizDaily reported earlier this year that hemp cultivators’ number one challenge before the 2018 bill passed was accessing processors, largely due to the inability of farmers to legally travel beyond their home states because of prohibitions on interstate travel. The new bill will allow growers in a state like North Dakota, which currently has just five hemp processors, to transport their crops to Oregon, which has more than 150 licensed processors. “While the new provisions allow states to adopt their own plans for regulating hemp, no state can prohibit the transport of hemp across its lines,” Shawn Hauser, chair of the hemp and cannabinoid group at Denver’s Vicente Sederberg law firm, told MJBizDaily. “There’s an express protection in the final language prohibiting interference with interstate transport, regardless of what kind of plan states choose to adopt.”

Legalization of hemp will also lift difficult restrictions on farmers seeking banking services, which should have the knock-on effect of increasing the likelihood of procuring low-interest loans and capital investment. That will inevitably help a variety of operations to scale up to larger levels of production. Annie Rouse, who in 2013 received a U.S. Fulbright scholarship to assess the Canadian hemp fiber market, believes the language in the 2018 Farm Bill will soon allow an influx of capital into U.S. hemp processors and manufacturers. Rouse, who is also the co-founder of Anavii Market, an online retailer for premium verified hemp-derived CBD oil, adds that the U.S. “needs to build demand for natural fiber materials in markets like automotive components, plastics, insulation, textiles and industrial products,” she says. “For the past eighty years we've looked at petrochemicals and synthesized materials to fulfill this market demand, but hemp starts to change that conversation. It's a new opportunity.”

Now that farmers can freely grow hemp on U.S. soil — with all the protections available to traditional farming — perhaps America will once again embrace this useful and multifaceted resource.

The bill is slated to go into effect Jan 1, 2019.

David Carpenter is a contributing writer for Forbes covering cannabis from an entrepreneur's perspective. You can follow him on Twitter.